Eli Lilly and health-care stocks are week's big winners, 3 sectors in the red

The S&P 500 is set for a 1% weekly gain despite Friday's downturn, largely driven by a rotation into value stocks and healthcare sector outperformance, notably following Berkshire Hathaway's revealed stake in UnitedHealth and significant insider buying in Eli Lilly. Conversely, consumer staples, utilities, and technology lagged, with Amazon's expanded same-day delivery service impacting retail stocks and a broader stall in the tech momentum trade. Looking ahead, the market will focus on key retail and enterprise software earnings, alongside Fed Chair Powell's highly anticipated Jackson Hole address, where commentary on interest rates will be critical given the high probability of a September rate cut.

Analysis

The market exhibited a clear rotational dynamic this week, with the S&P 500 poised for a gain of approximately 1% despite a Friday downturn, underscoring a shift from momentum-based companies into value stocks. The healthcare sector was the standout performer, buoyed by specific positive catalysts; a 13F filing revealed Berkshire Hathaway has taken a new position in UnitedHealth Group, while Eli Lilly recovered from a prior week's sell-off on the back of significant insider buying and a planned price increase for its Mounjaro drug in the UK. Conversely, three sectors posted negative returns due to distinct pressures. The technology sector's decline reflects a stall in the year-to-date momentum trade, utilities underperformed in response to climbing interest rates, and consumer staples faced headwinds as Amazon's announcement of an expanded same-day grocery delivery service directly impacted grocery-related stocks like Kroger, Walmart, and Target. Looking ahead, market focus will pivot to Fed Chair Jerome Powell's address at the Jackson Hole symposium, which carries significant weight given the market is pricing a 91% probability of a rate cut in September. Concurrently, earnings season will continue with key reports from the retail sector, where firms like Home Depot and Target are expected to provide insight on consumer health and their ability to absorb potential tariff impacts.

Key Decisions for Investors

• Monitor Fed Chair Powell's Jackson Hole commentary closely, as any deviation from the market's priced-in 91% probability of a September rate cut could induce significant volatility, particularly in interest-rate sensitive sectors like utilities and technology.
• The combination of institutional inflows, evidenced by Berkshire's stake in UnitedHealth, and strong insider buying at Eli Lilly suggests investors should assess the healthcare sector for continued strength and potential opportunities.
• Investors with exposure to consumer staples, especially grocery-focused retailers like Walmart, Target, and Kroger, should scrutinize upcoming earnings reports for management's outlook on margins in light of intensifying competition from Amazon and tariff exposure.
• The noted stall in the momentum trade warrants a portfolio review to potentially trim exposure to year-to-date technology winners and evaluate opportunities in value-oriented sectors that are now showing relative strength.